US Elections: Canadian Lessons in Healthcare

Posted By William Stephenson – Oct. 24, 2012

William Stephenson is a first-year law student at McGill and also studied at the University of Virginia School of Law. His main interests are in comparative healthcare systems and policies and in the impact of non-health related regulations on the healthcare system.

Obamacare is not the answer to the problems of the American healthcare system. If you believe universal healthcare is what America needs, here are three Canadian lessons on how to make it work.

1. EMPOWER THE STATES

Put control over healthcare in the hands of the states and help them establish universal healthcare on a voluntary basis. This better respects American federalism and gives states the latitude to adopt their own solutions.

In Canada, the federal Canada Health Act sets out a program whereby the federal government provides funds for provincial governments to manage their own health insurance plans as long as they meet the standards set forth in the Act. Compliance with the Act – and receipt of funds – is voluntary, and all provinces and territories now participate in the program.

Much the same could be done in the United States by granting funds to states that institute universal healthcare coverage and meet basic standards. Of course, the constitutional question would loom large, but the existence of current federal funding programs and South Dakota v Dole (483 US 203 (1987), holding that withholding federal highway funds for failure of state to raise drinking age was constitutional) are strong indicators that such a program’s constitutionality would be upheld.

2. JUST TAX IT

Forget the individual mandate. Make each participating state the primary health insurer and increase tax rates for people in higher income tax brackets, both at the state and federal level, to fund the plan.

Forcing many middle income individuals to buy health insurance adds a burden that they cannot afford. While Obamacare seeks to address this difficulty by subsidizing health insurance for such individuals, these subsidies are an unnecessary multiplication of administrative work and obtaining subsidized insurance would represent another hurdle for people struggling to make ends meet.

By increasing tax rates, marginally on higher middle income earners and most substantially on high income earners, rather than imposing an individual mandate on everyone, low and middle income individuals would be given the opportunity to achieve higher income levels, since health insurance would be one less burden on their finances.

In Canada, the healthcare system is a vector of economic mobility. Young people and lower income individuals are taxed at lower rates, but when they reach higher income levels pay more income tax and thus subsidize healthcare for the next generation, as once their healthcare was subsidized by higher income earners.

Obamacare’s provision that people under 26 be able to remain on their parents health insurance policy manifests good intent, but as with much else in the Act is unnecessarily complicated. Tax it, and remove the complications.

3. KEEP A PRIVATE OPTION (I.E. DON’T DO AS WE DO)

Canada does not allow people to obtain private health coverage; this is where Canada is an example of what not to do. The fear, of course, is that by allowing people to get private coverage, a two-tier system would develop in which people would favor the private tier, thus eroding the quality of the public system and threatening its very existence. This is a noble concern, but ignores the infinite potential permutations of a mixed public-private system. It also denies people the opportunity to obtain care when they need it as soon as possible – people who, in seeking treatment under a different regime, could also alleviate stress on the public system.

The private-public mix is prevalent and effective in Europe and Oceania. The issue is getting the mix right. Here then, each state could take note of the shortcomings in the Canadian model and observe the success of these other systems to achieve the best mix for its citizens.

Obamacare is a poor solution to America’s healthcare woes. For those looking for better solutions, Canada offers a wealth of lessons.